When market conditions turn shaky, many federal employees shift a large share of their balance into the TSP G Fund. It’s viewed as the safest choice among the TSP’s core investment options. While this move may feel reassuring in times of uncertainty, it’s important to weigh both the strengths and limitations before deciding how much of your portfolio to place there.
What the G Fund Is
The Government Securities Investment Fund (G Fund) is one of the TSP’s five core funds. Unlike the others, it doesn’t track a stock or bond index. Instead, it invests exclusively in short-term U.S. Treasury securities that are specially issued to the TSP. This makes the G Fund unique—it guarantees a positive return and carries no risk of loss.
That said, its performance over time has been modest compared to the other TSP funds. For context, the G Fund’s interest rate was 4.375% as of August 2025, and its assets totaled nearly $295 billion at the end of 2024.
Benefits of the G Fund
The G Fund’s greatest appeal is safety. You cannot lose money in it, and its returns have generally kept ahead of inflation. For employees approaching retirement, this makes it a practical place to park funds you expect to withdraw in the next few years.
There are also tax advantages. For example, G Fund contributions made through a Roth TSP can serve as a reliable emergency savings bucket. Because the fund typically outperforms standard savings accounts, it can provide a cushion while still allowing you to access your money tax-free.
The Drawbacks of the G Fund
The tradeoff for safety is limited growth. While moving money into the TSP G Fund as you near retirement can help reduce risk, relying too heavily on it over the long term could slow the growth of your nest egg. If your retirement plan depends on higher returns, the G Fund alone is unlikely to meet your needs.
Finding the Right Balance
Ultimately, how much of your balance you allocate to the TSP G Fund depends on your personal risk tolerance and retirement timeline. While it can play a valuable role in a diversified strategy, it shouldn’t automatically be the default home for your entire balance. Before making that decision, consider speaking with a Federal Retirement Consultant (FRC®) to ensure your investment choices align with both your short-term needs and long-term goals.
